Saudi relaunches power project bid

Riyadh, October 17, 2009

Saudi Arabia will invite bids in mid-November for a turnkey contract to build a giant power and water desalination units which was intially going to be awarded to Japan's Sumitomo Corporation, the project's pilot said.

Fuhaid bin Fahd Al-Sharif, governor of the state-controlled Saline Water Conversion Corp (SWCC), said the Japanese firm is welcome to make fresh bids for the Engineering, Procurement and Construction (EPC) contracts for the Ras Azzour plant.

Sumitomo said in May it has put on hold its consortium's plans for the $6 billion power and water desalination plant after the Saudi government said the plant was no longer designated an independent project.

'They are welcome but they will not get a preferential treatment. We want to reduce the cost of the project although we have increased its production capacities,' Sharif told Reuters in an interview.

SWCC signed this week an agreement with mining firm Maaden and power utility Saudi Electricity Company - both of which are also state-controlled - to build the plant.

'The tender will be launched by mid-November at the earliest or in December after the haj pilgrimge. It depends on when we will have the specifications ready,' Sharif said, adding that a first roadshow would start next week.

SWCC wants to complete the project during the last quarter of 2013, which would be six months ahead of the original schedule.

The agreement replaces initial plans by Maaden and SWCC to build two separate power and desalination plants to supply a planned aluminum complex at Ras Azzour and boost national power production capacity.

Under the new agreement, Ras Azzour power and water plant will produce 2,400 megawatts of electricity, which is more than under the original plan. The project will now be financed entirely by the government, Sharif said.

The increase in the plant's power production capacity could offset the impact some of the recent decreases in contracting and construction input costs could have on the project's overall cost. 'We still expect it to be lower than $6 billion,' he added.

SWCC will take 1 billion litres of the plant's water production capacity while Saudi Electricity will take 1,050 MW of the electricity the Ras Azzour plant will produce and Maaden will take 1,350MW.-Reuters